Sunday, February 05, 2012
"Double Decker" Estate Planning
In "Double Decker" estate planning, the children are involved with the process of planning the parent's estate. This can be useful, but it is not without it's hazards, when the Elder Law attorney becomes a lightening-rod for family conflict.Read more . . .
Sunday, April 17, 2011
Go Ahead - Do it yourself
When can you do it yourself, and when do you need a counseling lawyer?Read more . . .
Thursday, May 14, 2009
Still Your Baby ...
With your child’s college acceptance now in hand, you can turn your attention to preparing your eighteen year old for this new and exciting stage of life.
You will have a lot to plan for as you prepare to send your “baby” off to school this fall. Making sure that they have the right bedding, dorm supplies and meal plan is all part of that planning.
Once you’ve gotten through the checklists and dropped your “baby” off (with some tears and lots of good advice), the only thing you’ll have left to do is worry. You’ll worry whether your freshman is eating enough, studying enough, and getting enough sleep. While we can’t help with these everyday concerns, we can help with one of the big ones: How will you know if something happens to your son or daughter while away at school?
In most cases, unless your eighteen year old has signed the appropriate legal documents, (i.e. HIPAA release and Health Care Proxy) you might not know. HIPAA, the federal Health Insurance Portability and Accountability Act, was created to help protect patient privacy; but it can mean that you, as the parent of an “adult child”, may not be able to get information about your son or daughter in a medical emergency.
This is why your child should sign a HIPAA release before leaving home.
My office can create the HIPAA release and Health Care Proxy your child needs. We can then fax the documents to DocuBank, which will keep them on electronic file. Your child will be provided with an “I.C.E.” (In Case of Emergency) wallet card, with a toll-free number with which a hospital or doctor can obtain the documents by fax. The wallet card also contains allergy information and your name and telephone number.
If your child is brought to a hospital, the I.C.E. service will be activated. The documents will be faxed to the hospital, and I.C.E. will also send you an alert. Since the hospital will have the HIPAA release form before you call, there should be no obstacle to you receiving the information you need.
To find out more about HIPAA or DocuBank I.C.E., please call us 508-429-8888. Let us help you have one less thing to worry about this fall!
Wednesday, February 25, 2009
Medicaid Problem: Solved!
At almost $100,000 a year, long-term care costs would quickly use up a lifetime of savings. The chances of spending some time in a nursing home are high; by some reports, a person age 65 has 1 in 2 chance of spending part of his or her life in a nursing home.
There is a safety net: Medicaid, a federal program administered by the states that pays for long-term care. There is a catch, though. You only qualify for the safety net if you have essentially no savings left to pay for your care.
This seems unfair to many people. Why should the family have to lose all their savings? There is a solution. It is very simple, really, and perfectly legal. It hinges on the difference between income and principal.
How would it be if you could keep the Medicaid authorities from treating, for instance, your bank account as income available to be spent? What if they were only able to see the interest on the bank account, the income? What if the asset itself, the principal, would still be available to your family after you were gone?
By transferring your investment assets to an Income Trust, you can continue to control the investment and spend the income. The principal is protected from your liabilities immediately, and becomes “invisible” to Medicaid after 5 years.
If you want to do this, you should do it right away. The sooner you transfer your assets to your Income Trust, the more likely it is to survive the 5 year “lookback” period.
Sunday, January 25, 2009
A Man, a Woman, and an Asset
This is the story of a man, call him “Charlie,” his wife, “Irma,” and an airplane. All his life, Charlie had wanted to fly. When he retired, he took flying lessons, rented a plane, soloed, and then decided he wanted to buy his own plane.
Irma was all right on commercial flights, but sitting in the co-pilot’s seat in the cockpit of a small plane, feeling the vibration as it rolled down the runway, then watching the horizon drop away as they were airborne, feeling the sudden lightness in the pit of her stomach, she would be very frightened. But she loved her husband and she wanted him to be happy; so they bought a plane.
Charlie insisted that Irma learn to fly the plane. She took the lessons, but she never soloed, never got her own license. The only instrument she learned how to operate was the radio.
One day, Charlie and Irma took the plane on a long flight to another city. They were flying along, when Charlie suddenly gasped and slumped over the controls. He had suffered a heart attack. Irma radioed for help. When a control tower answered, she told them what had happened. “Tower” asked if she could fly the plane.
“No,” she said. “I can’t. I took some lessons, but I’m too afraid.”
Tower talked her down, reminding her how to work the controls, having her describe the positions of the different indicators.
The landing was terrifying for her. The only thing that nerved her to do it was knowing that an ambulance would be waiting to take her husband to the hospital, if she could just get the plane onto the ground. She landed hard, but safely. As soon as the plane was down, the ambulance came out to it. The attendants let Irma ride with Charlie to the hospital.
Hours later, assured that her husband was stable in the hospital, Irma thought of their little plane, sitting out there on the runway, where she had left it. She took a taxi back to the airfield, and went to see the friendly people in the control tower.
“What should I do?”
She should park the plane, they told her. She did not want to climb into that cockpit alone and take her husband’s place in the pilot’s seat, even to taxi it off the runway. Another small plane was coming in, and the controller asked that pilot to come to the control tower to meet Irma after he parked his own plane.
This pilot, “Peter,” agreed to taxi Charlie’s plane to a proper parking place and tie it down. She asked him if he would be willing to fly it home for her. He laughed, and reminded her that he had a plane of his own to take care of. But he might know a young man who had a pilot’s license, but no plane of his own.
Charlie recovered sufficiently to fly home as a passenger in a commercial jet. But it would be months before he was able to fly as a pilot again. In the meantime, “Tom” called them.
When Irma answered the telephone, Tom told her that he had heard from Peter that Irma had a plane with no pilot. Tom had a pilot’s license, but no plane. He wanted to know if Irma wanted to sell the plane.
“Sell the plane?” Irma looked at Charlie. He looked stricken. She knew he wasn’t ready to let go of his dream of flying again.
“No,” she said, “we don’t want to sell.”
They agreed that Tom would fly the little plane back to its home airport, and then he would come to Irma and Charlie’s home for dinner.
The two men became friends as they talked about airplanes and flying. After that, every so often, Tom would come to town and take the little plane for a short flight. He would always have dinner with Irma and Charlie.
One morning, Charlie announced happily that he would be going that day for his physical examination, so he could fly again. He put his clothes on, and sat on the edge of the bed to tie his shoes. Then he stood up and simply toppled over like a felled tree. Irma knew that this time he was dead. His mouth was open; his skin was grey. But she called 911 all the same. The ambulance came, and a nice police woman stayed with Irma while they took the body away.
After the funeral, she called Tom. “I want to sell you that plane,” she said. “I’ll sell it to you for a dollar. I hate it. I never want to see it again.”
Did Tom buy the plane for a dollar? Or did Irma come to realize that it was a valuable asset, and work out a more reasonable arrangement? Where would Tom get the money to pay Irma for the plane? Did Charlie and Irma talk about these things while Charlie was alive? You decide. Because, if you own a small business, this story may be your story.
Your spouse may be your co-pilot, but she (or he) may not want to “fly your plane” without you. You are the pilot. And, even if your spouse is legally part-owner of it, if you are the “pilot,” then it’s your “plane.” Who will “fly” your business if you have to “bail out” one day?
Think about it, will you? Please? Your “passengers” will be grateful that you did.
Sunday, December 14, 2008
Why Now Is the Perfect Time to Plan Your Estate
Your estate consists of all the things in the world you own and control outside of your own skin: from jewelry, to your house, bank accounts, insurance, investments and retirement accounts. Right now, the markets are saying that some of these things are not worth as much, in dollar terms, as they were at one time. Your retirement and investment accounts may have lost value due to the decline in the stock market. Your house or condo may not be worth as much as it was, or even as much as you paid for it. Does this mean that you may no longer have an estate worth planning for?
What if you were in a car accident, alive but in a coma, unable to manage your own affairs? The mortgage and the utility bills would still have to be paid. Maybe someone would have to sue the other driver. Even if you are married, with a joint account, your spouse could not sue on your behalf, access your retirement accounts, or deposit a check made out to you. If you have an estate plan in place, someone else would be able to use your bank account to pay your mortgage, and a document called a Power of Attorney would let them sue on your behalf and do many other things. If you have no plan in place, their only option would be go to court to have you declared incompetent. Your control over your property would then be taken away from you, probably permanently, and given to the person who would now be your guardian.
What if you died in that accident and you had no estate plan in place? Someone would have to file a lawsuit to transfer the things you own and control to your closest blood relatives. If you were single, that would be your parents, if they were alive, otherwise, your siblings. What if you had been living with someone as a couple, but you just hadn’t gotten married yet? That person would be out of luck. What if you are divorced, with children? Your ex, the children’s “natural guardian” would get the kids and the stuff, too. What if you were married, wouldn’t your spouse just get everything? Not necessarily, and if he or she did, that fact might cost your family dearly in estate taxes down the road.
How do you want to be remembered, as someone who had no plan, or as someone responsible, who thought about the people in your life and provided for their needs?
None of the reasons why estate planning is a good idea go away because the market went down. You still have people in your life. You still want to make it easier for them. You still don’t want to have people telling your loved ones that you were an idiot for not planning, even if you won’t be around to hear about it.
So why is now the perfect time to plan? Because, it is cheaper to plan when asset values are down; estate planning lawyers often base their fees on the value of the estate.
And, if you have an estate tax problem, meaning that your total estate (including insurance and retirement plans) might be over a million dollars if you are single, or two million for a couple (this is in Massachusetts), there is an added advantage to planning now. Now is the time to lock in lower valuations and add what would have been paid in estate taxes, had you not planned, to the amount you can leave to the people you care about. So now is really the perfect time.
So, if you have put it off until now, pick up the phone and call your attorney. The window of opportunity is closing fast. Before you know it, we’ll all be feeling rich again.
Tuesday, April 29, 2008
The old rules were, lawyers weren’t allowed to advertise. If you needed the services of a lawyer, you would presumably hire one you knew, perhaps a guy you played golf with. In 1977, the Supreme Court struck down this limitation in Bates v. State Bar of Arizona
I advertise. In a sense, I think it is my duty to advertise. Not everyone who needs a lawyer knows one. I feel I should let people know that I am a practicing lawyer, and what my specialty is.
As a sort of “side-effect” of advertising, I get what I call “dial-a-lawyer” calls. Somebody has a problem relating to an estate – usually someone else’s. They feel they were done out of something they had coming to them. I listen, feeling like a legal “Dear Abby,” try to tease out the legal issues from the emotional ones, and suggest approaches. I may explain the difference between a counseling oriented lawyer like myself and a litigator. Often, I can point them in the direction of someone who does probate litigation. Even if such conversations are unlikely to advance my practice directly, I feel that I have done a good thing in guiding someone to a person who can help them.
Besides giving me an opportunity to be helpful, “dial-a-lawyer” calls often re-affirm my counseling-oriented philosophy of practice. Unfortunately, some lawyers, (one assumes, inadvertently) help their clients to do things that are not really in the clients’ or their families’ best interest. I suspect this stems from a focus on creating a functioning legal document. But a will or a trust may be perfectly legal in form, while embodying a scheme that is likely to make people unhappy, without advancing the client’s real goals very much. I believe that a lawyer should counsel clients, not only about how to accomplish what they plan to do, but on whether what they are planning is likely to work the way they expect.
Of course, the calls I really like to get on my ads, are those from people who want to register for my workshop - my next one is on May 15. I get enough of those to justify the ads. This is a good thing. I don’t think I am really cut out to be an advice columnist.
By the way, there really is a service called “Dial-a-Lawyer.” It is run by the Massachusetts Bar Association, of which I am a member, and I sometimes volunteer on it. To find out more, click here
And, if you have a question about an estate plan – yours or someone else’s – please feel free to call me at (508) 429-8888.
Friday, April 04, 2008
Why not Just a Simple Will?
This is a conversation I often have when people find out that I create living trusts for my clients: Why a trust? They ask me. It seems so complicated. Why not just a simple will? What they do not realize is that a will is not simple.
Most lawyers believe themselves competent to draft a “simple will.” But even the simplest will is quite complicated. Clients often come to me with wills they want to “update” or change. Looking at these documents, I have become convinced that many lawyers who think they know how to draft a will actually know very little about it.
A will is interpreted by the court in the context of certain rules. For instance, every executor must post a bond. But, if the will is properly drafted, this can be a mere statement by the executor that he or she promises to faithfully execute the will. Otherwise, the executor may need to get sureties – other people who agree to back up that promise with their own money, or even a corporate surety – essentially an insurance policy. It is obviously silly for a surviving spouse who is going to distribute the assets to herself to have to post a bond with sureties. But the rules are the rules. If the will does not say otherwise, sureties are required.
A trust, by contrast, is a simple document. It is a contract. A client signs a living trust twice, as trustmaker – the person providing the assets, and as trustee – the person who will hold the assets. It is essentially a contract between you and yourself. That may seem a little odd, but it is governed by the same law that governs any contract.
A will must be signed with elaborate formalities: two witnesses and a notary, all in the same room at the same time. It must be “published” – the signer announcing out loud “this is my will.” The witnesses must swear that, as far as they can tell, the signer is of sound mind, over 18 years of age, and under no undue influence. A trust needs no such formalities. It need not even be notarized.
A will does nothing until it is probated. Probate is a lawsuit. A petitioner, usually the person named in the will as “executor” - the person who is to make the signer’s wishes a reality, begs the court to approve the will and appoint the named executor. All the heirs-at-law must be given notice, including, perhaps, an estranged (but not-yet divorced) spouse and all children (unless they have been adopted by someone else). If there is no spouse and no children in the picture, “heirs” may include remote relatives the person had no contact with during life.
By contrast, a trust is effective as soon as it is signed. The trusts we draft for our clients provide that, if the client becomes disabled (due to Alzheimer’s disease, for instance), someone else (named by the client in the trust) takes over as trustee. Nothing else changes. The client is still the beneficiary. The trustee has a duty – legally enforceable in contract law – to use the assets to take care of the beneficiary. If the client has named any other beneficiaries during his lifetime, the new trustee must take care of them, too.
On the client’s death, a new trustee takes over (this may be the same person who would take over at disability). That person proceeds to give the assets (which, as trustee, he or she now owns) to the people named in the trust to receive them. There is no requirement to give notice to anyone who is not a beneficiary of the trust.
Even if there is no contest, an executor under a will has no power until the court issues an order of appointment. This can be frustrating to a surviving spouse or child trying to make funeral arrangements or being dunned by the decedent’s creditors for money that is not available until the appointment arrives. A trustee’s power to pay funeral costs or creditors' claims can be set out in the trust, so that there is no need to wait for a court order.
So, it is really the trust that is simple. It is a simpler legal document, governed by simpler laws. Acting under it is much simpler, because there is no need to get a court order. Moreover, since a trust is effective as soon as it is signed, it can do things, such as providing for the client who becomes disabled, that a will simply cannot do.
Monday, March 10, 2008
Estate Planning for Separated Spouses
What kind of estate planning advice would I have for a person who is separated from his or her spouse? This question came up recently on a professional listserve that I subscribe to. My advice is simple to give, though I realize it may be hard to follow: get a divorce.
This is because, if you don’t have an estate plan, or even if you do, Massachusetts has a plan for your estate: the first $200,000, plus (if you have children) half of everything over that, goes to your spouse. This is what happens if you have no will. You cannot disinherit your spouse in your will. The spouse can “elect against” the will, having the will set aside, and taking the share he or she would have received if there was no will.
“Spouse,” in this context, means the person you were legally married to. The marriage may be irretrievably broken. You may be separated, you may not have spoken for years, but if there was no legal divorce, you are still married, so far as probate law is concerned.
This reminds me of the days when I was in general practice, and the nicest divorce I ever did. A pleasant, middle-aged couple came to see me for estate planning. I asked them, just to make sure, “are you married?” She said yes, and he said no.
It turned out they had been living together for twenty years. She had left her husband, but had never gotten a divorce. I told them I could not plan for them, unless this situation was corrected. So I represented her in the divorce.
There was plenty of money on both sides, and no children. You would think, after twenty years, there would be nothing left to fight about. But, you know, they found something? A piece of furniture! Even a “nice” divorce is not very nice.
What impressed me most of all, was this very dignified lady beginning to weep, as the divorce was finalized. Even though it was twenty years ago, the ending of a relationship was a hard thing to face.
So I realize, it may be hard to face the process of a divorce, the formal ending of something that was begun with joy.
Can a trust protect against a spousal election? Possibly, if there are no probate assets at all. But I still think it is better to have one’s legal status reflect emotional reality, even if the process is hard to face.
Thursday, March 06, 2008
Living Trusts: More Than Will-Substitutes
Most people think of living trusts in connection with estate planning, as being roughly equivalent to wills. In fact, living trusts were first widely used in California in response to the high statutory fees for probating a will in that state. But a living trust can be more than a will substitute. A living trust can make your life easier, by allowing someone to step in to take care of your financial affairs if you are disabled and unable to fend for yourself.
Most estate plans rely on a power of attorney to do this. A power of attorney can be described as a blank check. You give someone the same ability you have to write checks, buy and sell property, anything you can do, you can empower your “attorney-in-fact,” or “agent” to do for you. Your agent does not sign any agreement, is not bound by any directions you may give him or her, and the power usually provides that the agent is not liable for anything he or she may do under the power. Horror stories abound of people who came home from the hospital and found that their houses had been sold, or of people who have had their bank accounts emptied by someone they had thought they could trust.
A properly drawn living trust, on the other hand, can include specific instructions to the trustee. The trustee signs an acceptance of trust, and becomes bound by these instructions, which are legally enforceable.
Another problem with the power of attorney is that financial institutions are not bound to accept it. A power may be too old – “stale.” Some powers called “springing” powers of attorney, become effective only when the principal becomes disabled. A springing power may be too new for a banker’s liking. You mean the person was fine yesterday, and today they’re disabled? There is no way to force a bank or a broker to accept a power. In contrast, if an account is properly titled to the trust, the bank or broker has to follow the instructions of the trustee.
By making it possible for someone to care for you when you are not able to manage your own affairs, a living trust can go beyond being a will substitute, to make your life and your family’s life easier.
Wednesday, March 05, 2008
What Happens to Your Car When You Go?
You can't take it with you! If you leave a survivor – widow or widower, he or she can simply re-register the car in his or her own name, no questions asked. But what if you are single? The car becomes part of your probate estate. Someone must petition the court to be allowed to gather up your belongings, pay your debts, and distribute the remaining assets, according to your will if you had one, otherwise according to the law.
If you have done living trust planning, the lawyer probably told you this would all be taken care of without having to go through the court process. The trust would simply be “settled.” A new trustee would take over from you and make all the distributions.
But trusts only work for property that is placed in the trust. Your lawyer may have made out a deed to place your house in the trust. He or she may or may not have helped you through a process of placing your bank account in the trust, along with your investment accounts and so on. But what about that car?
In Massachusetts, in order to transfer a car, even within a family, there must be a change of registration, which requires proof that the new owner is properly insured. The attitude of many insurance agents in Massachusetts has been that transfer of a car into a living trust requires expensive commercial insurance. Consequently, many attorneys have advised that the car can be left outside the trust.
That means probate. Don’t worry, they say. There is a simple procedure, called Voluntary Executor, for probate estates of less than $15,000 plus a motor vehicle. So you can safely leave your car outside the trust.
There is only one problem with this approach. A voluntary executor is still an executor, and an executor is personally liable for estate taxes. (And may be liable for the decedent’s debts, if the creditors file claims properly). If your non-probate estate (living trust, IRA accounts, insurance...) might be taxable, do you really want to be asking someone to put themselves in a position of being liable for estate taxes on property over which they may have no control? And a voluntary executor is stuck with the position. Unlike an ordinary probate process, which is closed when the judge approves the executor’s final account, there is no provision in the law for closing a voluntary executorship.
As it turns out, there is an easy fix. Put everything, including your car, in your living trust. Notwithstanding what your insurance agent may say, this is perfectly possible. No commercial policy is required. A special endorsement allows the policy to cover a vehicle owned by a trust. There are fees imposed by the Registry of Motor Vehicles for changing the registration, but the fees are less than $100, and it may be worth it to avoid laying liability as a voluntary executor on the shoulders of your designated successor trustee.
You may have to change insurance agents, if the one you have doesn’t understand the endorsement, and insurance companies, as some still insist that this can’t be done. But there are companies out there who are willing to write insurance for a vehicle in a living trust, and agents who are willing to go the extra mile for their clients.
Jennifer A. Deland, Counselor-at-Law advises clients in all areas of estate planning, including wealth transmission planning, disability planning, special needs, pet trusts, Medicaid/Masshealth and related aspects of probate law. Her office is convenient for clients throughout the Metrowest area, including Holliston, Hopkinton, Milford, Medway, Medfield, Ashland, Framingham, Natick, Sherborn, Dover, Southborough, Sudbury and Westborough.